question_answer

State the behaviour of marginal product in the law of variable proportions. Explain the cause of this behaviour.

Answer:

Law of variable proportions
As per the law of variable proportion, if more and more units of variable factor (labour) are combined with the same quantity of fixed factor (capital) then initially the total product will increase. But gradually, after a point, the total product will fall.
Behaviour of MP
Stages	Stage?s Name	MP	Range
I	Increasing Returns to a factor	MP increase till point U	From 0 to point U
II	Diminishing Returns to a factor	MP falls and touches x-axis	From U onwards
III	Negative Returns to a factor	MP becomes negative	Beyond x-axis
The main reason behind this behaviour of MP is Law of Diminishing Marginal Product. According: to the Law of Diminishing Marginal Product, if the employment of variable factor is kept on increasing along with the constant level of the fixed factor, then finally a point will be reached where after, the marginal product of the variable factor will start falling and after this point the marginal product of any additional variable factor can be zero and even be negative.